Saturday September 17, 2016
It’s been a fun week with our final Special Event of the season, Oktoberfest, as part of our celebrating the completion of our budget for FY 2017.
It was a long evening for what was likely one of the most important council meetings of the year as the council completed the budget and tax rate process.
First, the council approved a motion to create a public private partnership with the Addison Legacy Foundation to explore ways to connect East and West Addison.
The Legacy Foundation will be responsible for raising $30,000 which will be the first money spent in a process led by our City Manager.
No Town funds will be given to the Legacy Foundation; rather, the Hotel fund with its excess fund reserves will set aside up to $70,000 to pursue the exploration as outlined in the Foundation’s earlier presentation.
Voting in favor of this motion were Hughes, Arfsten, Wilcox and Meier, voting opposed were Walden, Duffy and Angell.
After a brief staff presentation on a potential funding plan for the Infrastructure Investment Fund, interim CFO Dr. Scott Neils presented a thorough review of the current status of the budget with the remaining options to be decided.
This was a very good presentation that I believe gave a complete overview of the budget and the decision points that we resolved.
After Scott’s presentation and a public hearing, council member Walden made a motion and council member Duffy seconded to adopt a proposed budget that includes an increase of over $1.6 million in new recurring personnel costs, including an average 5% merit pay increase for our employees, as well as other increases in their benefit costs, including a $250,000 increase in the annual $2 million contribution to TMRS, the employee retirement system.
The Walden/Duffy motion also included funding of pension raises for our retirees.
Their proposed budget has revenues of just over $74 million and expenditures of just over $107 million with a goal of increasing our funding of the Infrastructure Investment Fund.
I made a motion to amend their proposal by deleting the funds for the retiree pay increase and specifying that we immediately increase the fund balance in the Infrastructure Investment Fund to $4.7 million this year and to $6.0 million by the end of FY ‘17. My motion to amend the proposed budget failed with Wilcox and Meier voting in favor and Walden Duffy, Angell, Hughes and Arfsten voting opposed.
We then took up the original motion and had a very lengthy discussion with each council member participating. I strongly encourage you to watch the video and determine for yourself if the council made the right decision.
The council voted 5-2 to approve the budget motion made by Walden and Duffy with council members Hughes, Angell and Arfsten joining in voting in favor and council members Wilcox and Meier voting opposed.
During the meeting I outlined my reasons for voting opposed, that included that we are spending more than we are taking in, we are spending reserves, and we are adding very large permanent recurring costs.
I believe we should make a substantial contribution now to our Infrastructure Investment Fund, utilizing the excess revenues from last year, our savings from restructuring our debt, and a small portion of our tax rate to achieve an immediate Infrastructure Investment Fund balance of $4.7 million and to be at $6.0 million by the end of FY ‘17.
I also believe that with the escalating cost of our overall benefit packages we provide for our employees, creating a “pool” of funds that would provide our City Manager the ability to provide an average 4% raise that would begin in January of 2017 is very competitive and reasonable.
That would give our City Manager the discretion to adjust pay increases based not only on Merit but also on Market; i.e., if pay for firefighters and police officers is increasing at a disproportional rate to other employees, he then would have the discretion to adjust accordingly.
With this Council’s budget, now the aggregate increase in pay over the last 5 years for our firefighters is 36.44% and for our police officers is 31.31% and is 26% for all other Town employees.
One of my biggest concerns with this budget was the funding of pension increases for our retirees of $55,000 this year and increased liability in our pension fund of $532,000, bringing our total unfunded liability to over $5 million in our employees’ pension plan.
I do not believe this is sustainable and I believe undermines the pension fund’s viability.
This budget increases the fees we all pay for water, sewer and storm water, increases our property taxes, spends more than ever before and creates new unfunded liabilities, in addition to creating new benefit programs for our employees.
I believe we missed a golden opportunity to balance the needs of our community with the desires of our employees, and still be fiscally responsible and conservative.
Our next agenda item was the setting of the property tax rate for FY 2017 that will help pay for all of the increases just approved in the budget.
Council member Walden made a motion to approve a tax rate of .560472 and council member Hughes second the motion. Voting in favor of that motion were Walden, Duffy, Angell, Hughes and Arfsten, voting opposed were Wilcox and Meier.
This was the most confusing year that I have ever seen in understanding what actually happened with our tax rate.
Two very good things have happened in the last couple of years:
(1) Our property values have increased significantly, thanks to the excellent expansion of our commercial tax base and
(2) We very effectively took advantage of a low interest rate environment by refinancing much of our debt.
All of that is good; however it also very effectively obscures the true story on our tax rate.
Remember that our tax rate is a combination of the M&O (Maintenance and Operations) rate and the Debt Service Rate which is set by law.
On the surface it looks like we barely raised the tax rate; however, looking just below the surface you will see that the M&O portion of the tax rate increased almost 8% to pay for the new permanent recurring costs I covered above.
Because the debt service rate went down (thanks to our refinancing success), the total tax rate was a more moderate increase of less than 4%.
I voted against the proposed tax rate for several reasons. As mentioned above, there are several areas where I believe we are spending more than we should.
If the council had adopted the proposed budget that our City Manager submitted on July 31, we could have fully funded all of his requests with a tax rate of .546984!!!
That would be the lowest property tax rate we have had in Addison in over 15 years and would have meant an actual net tax reduction for most Addison tax payers.
Imagine how beneficial that would have been for those folks on fixed incomes or enduring large increases in rent. Most importantly, think of the beneficial message it would send to our business community and our competing cities that are routinely trying to steal away our Addison businesses.
Most of the surrounding cities to our west and north have lower property tax rates than Addison and they use that to their advantage in their business development efforts. The .546984 rate would have narrowed that gap.
I believe that we missed an incredibly positive, business-friendly message opportunity. We failed to look ahead and instead Council did what feels good today at the expense of tomorrow.
Next, the council unanimously approved a Special Use Permit for a beautiful new covered patio for Arthur’s Restaurant at 15175 Quorum Drive that hopefully will be completed by the end of this year.
The council also unanimously approved a rezoning and Special Use Permit for a new restaurant called K Grill at the former Jason’s Deli site at 4021 Belt Line, Suite 302, that has been vacant for over two years, in the front part of the Belt Line Square Shopping Center that now includes Rio Mambo and longtime Addison great, Lefty’s Steak and Seafood.
Later in the evening for item #18 the council voted 6-1 to remove the deed restriction that had been requested by the developer prohibiting the use of low income housing tax credits (Sec. 8) and low income housing subsidies that were part of the original agreement with the developer of the former Sam’s site, now called Addison Grove.
Voting in favor of the motion to remove the Sec. 8 deed restriction and amend the language: Walden, Duffy, Angell, Hughes, Wilcox and Arfsten. Voting opposed to the removal of the Sec. 8 deed restriction, Meier.
The council approved an agreement with CBRE Inc. for real estate brokerage services to help us determine how we should most effectively deal with the properties the Town owns on Belt Line Road with recommendations for next steps expected before the end of this calendar year.
A new interlocal agreement with the City of Carrollton was approved by the council to provide jail services to Addison arrestees and an interlocal agreement with the North Central Texas Council of Governments for the provision of electronic warrant payment services for Addison municipal court that will improve the efficiency of our process, as well as ensure more effective financial controls.
The final item of a very long evening was the approval of some minor revisions in the bylaws of the Finance Committee.
State Representative Linda Koop dropped in to say Hello during our council meeting and we took a brief recess for her to introduce herself and let us know how much she enjoys representing Addison down in Austin.
Council Member Activities
On Monday council members Wilcox, Hughes and Arfsten joined me for our Economic Development Luncheon at Flying Saucer.
On Monday evening council members Arfsten, Angell and Hughes joined City Manager Wes Pierson and me for the monthly Addison Circle Neighborhood Association meeting at Lion and Crown in Addison Circle.
All council members were present for the Council meeting and work session on Tuesday evening at Town Hall.
Council members Arfsten, Hughes and Angell joined me for the ribbon cutting event at Rising Star Insurance on Thursday morning.
Council members Wilcox, Arfsten, Hughes and Angell joined me for the 45th annual North Texas Commission annual members’ luncheon.
Council member Hughes joined me for our Third Thursday of the month “After Hours with the Mayor” event at Lion and Crown on Thursday evening.
Council members Wilcox, Arfsten, Hughes, Duffy and Angell joined me in the fun and participation of tapping the keg for our 29th annual Oktoberfest on Thursday evening.
Q&A with the Mayor
Will this council continue to fund our Infrastructure Investment Fund with the financial discipline necessary to accumulate dollars to avoid or reduce our dependence on debt in the future for looming large infrastructure projects?
A: Partially yes. The Fund balance will begin the year at about the same level as it has been with a plan in place to grow it to $4.7 million by the end of FY 2017.
Will this council increase a benefit and add to the already huge unfunded liability in our pension plan by giving retirees a COLA pay raise?
A: Yes, the council voted to add $55,000 to increase pay for retirees this year and to increase the unfunded liability in our employees’ pension by $532,000 to a total unfunded liability of just over $5,000,000.
Will this council form a partnership with the private sector to explore the opportunities of realizing the long held aspiration of connecting East and West Addison?
A: Yes, the council voted to set aside $70,000 in the Hotel Fund budget as a challenge to the Addison Legacy Foundation to raise $30,000 to be the first funds spent pursuing a plan, in coordination with our City Manager, to explore the east west Addison connectivity options.
Will this council continue the recent fiscal practice of maintaining a reserve fund balance in excess of 30% in our General Fund to protect us and provide a financial safety net for us during volatile economic times?
A: No, the council chose a plan that reduces the General Fund balance to just over 28%.
Will this council spend more than they take in, incurring debt to cover the expense?
A: This council approved a budget that will spend $107,151,858 on Revenues of $74,276,533. Debt funds and reserves will be used to cover the revenue gap.
Will this council choose to spend the dollars saved in the last two years’ budgets, or instead add them to our Infrastructure Investment Fund or reserves?
A: Yes and No. The council chose to spend a portion of the savings of the last two years on operations and small projects, as well as add some dollars to the Infrastructure Investment Fund.
Will this council find a way to utilize the savings generated by our debt refinancing the last couple of years to minimize the impact on our tax payers of funding the large, underfunded infrastructure projects (Beltline and Midway Rd)?
A: Yes and No. There was a miscalculation of the size of this fund discovered in the last week; however, the council did choose to use a portion of the balance to help increase funding for the Infrastructure Investment Fund.
Will this council find a way to balance all of the needs and interests of our community to create a sustainable and fiscally conservative budget funded by a fair and reasonable tax rate?
A: Only time will tell. As mentioned above, there were several decisions made and several decisions not made that will have long term effects on our Addison and only time will tell their true impact.
Our Crowne Plaza Hotel was once again the site to host the 9th annual Big Design Conference for a three day run in Addison that concluded last Saturday afternoon.
I was able to spend some time with their organizers and speak to the very large crowd on Saturday afternoon, thanking them for continuing to come visit us here in Addison for their very creative and innovative conference.
With over 1,000 attendees from all over the country, the Big Design conference in Addison has become one of the premier UX events in the country. The very exciting news is that we will be able to celebrate their 10th anniversary next year right here in Addison!
On Thursday morning council members Arfsten, Hughes, and Angell joined me for a ribbon cutting with our partners from the Metrocrest Chamber of Commerce at Rising Star Insurance Group at 15636 Quorum Drive in Addison Circle.
Owner Scott C. Kakacek and his team were all on hand to say Hello and introduce their business to Addison. They are an independent insurance broker with access to over 150 insurance providers to cover customer needs in Home, Auto, Business or Life Insurance.
Scott currently has 4 employees at his new headquarters in Addison with plans to bring his current 14 other employees from Richardson to join us here in Addison.
Scott lives in the Aventura, just a few steps away from his office and as he said, “I love being in Addison and I even bleed Addison”, a great guy that we are very proud to have, not only as a resident but as a very successful business owner with us here in Addison.
Their phone number is 972-587-7700 ext 101 and website is www.RisingStarIns.com. Give yourself an opportunity to do business with a neighbor and an Addison business!
Last Saturday was a busy day around Addison as the Arbor Foundation led by Board Chair Dr. Jay Ihrig held their quarterly educational event with sculptor Jim Eppler sharing his ”Lost Wax Technique” lecture at the beautiful Mary Kay headquarters conference room.
Former mayor pro tempore Blake Clemens covered the event for us and shared these pictures. He also took the headline photo at the very top.
Our 29th annual Oktoberfest celebration began with our traditional keg tapping on Thursday evening with a great turnout of fun loving folks!!
The fun continues all day today and into tomorrow afternoon and early evening at Addison Circle Park. We are already making plans for next year’s 30th celebration!!
Monday, September 19, Joint Council / P&Z Meeting, 6:00 pm, Addison TreeHouse.
I hope you have a great weekend. There are many ways to enjoy Oktoberfest even if we have a little rainy weather. Remember, we have the indoor Conference Centre and a very large tent with lots of music, food and fun inside!
See you there!